Weir Group chief executive Mark Selway yesterday defended himself against the charge that he is solely concerned with his responsibility to shareholders, describing the claim as "very unfair".
The Australian was commenting following February's £48m sale of Glasgow-based Weir Pumps to rival Sulzer, which will see 450 skilled engineering jobs lost at the division's Cathcart plant by 2009.
Earlier this month it emerged that none of Weir's directors could find time to meet First Minister Jack McConnell to discuss the sell-off, an omission which attracted fierce criticism. It was not lost on observers that chairman Sir Robert Smith is a stout advocate of corporate social responsibility.
Selway stressed that he has spoken regularly to employees affected by the closure. He also told The Herald that he has spoken to McConnell "in the course of the last week" to "outline what was in our announcement".
The Weir Group chief declined to say whether the First Minister was reassured by his explanation, claiming there was "not much more (I) can say".
"All we (could) do is tell him what's in the announcement. I do not want to go to prison," added Selway, pointing out that the Sulzer deal is subject to regulatory approvals expected in the first half of 2007.
Speaking as Weir unveiled record profits, Selway confirmed that he also spoke to Scots entrepreneur Jim McColl, who showed interest in running the pumps business as a going concern. Selway previously dismissed the option of selling to McColl and yesterday explained why McColl would not have been a suitable buyer.
"Jim and I know each other and I did speak with him. But what is important is that these are quite sophisticated nuclear pumps used in China and India and with very long lead times.
"Customers will have a firm view on who can carry out that order book and Sulzer has that capability. Jim is a smart guy and he recognised that end-customers have to be satisfied the right ownership is there."
Weir yesterday posted record underlying pre-tax profits of £87.1m, a 40% rise on last year and ahead of City expectations. Strong cash generation helped cut net debt from £76.4m in 2005 to £7.1m.
The balance sheet was also boosted by an agreement with trustees of the UK final salary pension plan to cap future benefit accruals in line with inflation. This helped virtually wipe out the combined net funding shortfall in Weir's 16 pension schemes worldwide, which stood at £62m in 2005 and fell to £3.9m at December 31. It also triggered a one-off gain to profits of £10.7m, boosting the pre-tax surplus including exceptionals to £102.8m, up from £37.5m last time.
The bottom line was also aided by a full-year contribution from Italian pumps manufacturer Pompe Gabbioneta, which Weir acquired in 2005 for £69m.
Yesterday's results come towards the end of Selway's five-year plan to transform the business, which has left Weir well-placed to expand in high-growth markets including the former Soviet Union, the Indo-Pacific region and Brazil.
"Unattractive" markets such as water treatment and automotive have been exited in that time. More than 70% of output last year was generated from the power, oil and gas and mining markets.
The group's order book climbed 23% on 2005 to just under £1.1bn, while revenue rose 19% to £940.9m.
A full-year dividend of 14.5p is 10% higher than last time.
Selway said he can raise a £400m war chest for acquisitions targeted at the coal, power generation and mining sectors.
Weir has been linked with a hefty bid for mining process business in Australia, but the chief executive added: "We would like to grow in the mining business in Australia, but there is nothing presently on our radar screen."
Looking ahead, Selway said 2007 orders are not at the "heady levels" of last year but he is comfortable with analyst forecasts of pre-tax profit of about £95m, after factoring in a £6m "hit" reflecting a weak dollar.
"The good market outlook that we've seen, the very strong order book that we have going into this year (puts) us in pretty good shape for the balance of 2007," he said.
Selway also commented on reports that the nuclear submarine dockyard at Devonport, in which Weir holds a 24.5% stake, could be sold, with Faslane submarine base owner Babcock International thought to be in the running. "The only way we'd come out is if we were to see full value," he stressed.
Weir's bullish results impressed the City. Analysts at Credit Suisse said: "Results show the group can deliver asset quality is today much, much higher than in the past."
Merrill Lynch said: "A strong and positive outlook reinforces our confidence in our forecasts, which are some 5%-10% ahead of consensus."
Weir shares closed up 24p at 601p.
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